Larger plan sponsors tackle retirement readiness

By BenefitsPro

By Paula Aven Gladych

Retirement plan sponsors want to boost their plan participation rates, but that isn’t their top goal anymore.

According to a study by Transamerica Retirement Solutions, more than 41 percent of plan sponsors, with at least 1,000 employees, want to help employees save enough for retirement, up from 35 percent in 2012.

More than half of the 253 plan sponsors that completed the survey said their participation rate was 70 percent or higher and nearly one-quarter reported a participation rate of more than 90 percent.

After declining slightly in 2012, average deferral rates seem to be rebounding, climbing to 7.5 percent in 2013 from 6.7 percent last year, the report found.

Ninety-two percent of all 401(k) plans said they offer an employer contribution, usually a matching one. The most common formula used is 50 cents on the dollar up to 6 percent of pay.

Plan sponsors of 401(k) plans have begun to jump back from the economic recession when they stopped matching employee contributions or reduced them. More than one-third of those surveyed increased their employer contributions this year and one-in-five reinstated previously reduced or suspended contributions, the report found.

Some plan sponsors are still in reduction mode, with one-third of those surveyed reducing or eliminating their employer contributions altogether.

The study found most 401(k) plans offer at least 15 investment options, but the number offering more than that declined this year.

One-in-five plan sponsors said they amended their plans this year to allow participants to take advantage of in-plan conversions to a Roth 401(k) that were introduced during the fiscal cliff talks earlier in the year.